How does home foreclosure work?
Question:
Answer:
Once your home goes into foreclosure the home will be set to be sold at a sheriff's auction. Many times the lender will buy back their own homes so that they can sell it themselves and make back a little more of the money.
The bank will not garnish your wages while the home is in foreclosure. After the home is sold at auction, the lender can come after you for the shortage between what it sold for and what you owed. You will most definitely receive a 1099c for a cancellation of debt after the home is sold at auction. This will be in the amount of the difference between what the house sells for and what you owed on the home. This 1099c will be reported to the IRS and you will have to treat it as "normal" income for that tax year. For example if you owed 150,000 on the house and the lender ended up selling it for 110,000, you would be issued a 1099c in the amount of 40,000. You would claim this as income for that tax year and you would have to pay income taxes on this money (most likely federal, state and local which could result in a pretty hefty sum of taxes).
As one of the other posters mentioned your best option would probably be to explain what is going on to the lender and ask them about a short sale. This way your credit does not get totally ruined, you should be able to get more money for the house than the lender, you will not have a foreclosure showing on your credit, you will not be sued for the difference, and the if you still receive a 1099c it will be for less than if the lender has to sell the home themselves. Check out the links below for information on short sales and avoiding foreclosure.
They don't garish wages for it duing foreclosure, although I would think they can after the fact.
They take possession and are presently simply selling most of them. They sell them short and while they can get hte rest of the money out of you they typically have not been. Altough typically people work with them, your idea is not typical and they very well may sue you for the rest of the money, plus all of the expenses. They would win, as you obviously did borrow their money and you obviously did not repay the money that you took.
You are better off contacting them and telling them that you want to default and try a "short sale". If you are working with them they agree to take a loss for a specific amount and you sell the house for that. While it is not that great for your credit they will leave you alone.
If you are willing to walk away call the bank and ask them if they will except a deed in lieu of foreclosure. This means you turn the deed back over to them before foreclosure, and they agree not to come after you for the difference.
Remember if they sell the house for less than owed then can attach it to you as personal loan debt. meaning you still have to repay the difference. If they waive the difference, you are liable to pay taxes on that as income to the IRS.
Deed in lieu of foreclosure takes you off the hook for the last 2 scenarios.
good luck
The bank can only garnish your wages if they seek a deficiency judgment after the foreclosure. And they can only seek a deficiency judgment in two circumstances:
1) If the house does not sell at sheriff sale for what you owed on it.
2) If that state's foreclosure laws allow for it.
The bank can't take possession of the house until it is sold at sheriff sale and the new owner is granted possession of it and after the sheriff has evicted the former homeowners. The lender isn't able just to evict everyone before the law process is over, although they may change the locks on the house if they determine that no one is living in the property (if the property is abandoned).
Again, the bank can not sue the former homeowners for the difference between what they owed and what the house sold for, unless the state's laws allow for it. And banks very rarely do this, as most homeowners do not have a lot of extra cash to pay another judgment.
Hope that helps.
ForeclosureFish
http://www.foreclosurefish.com/...
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